412 F.

2d 712

The A. S. ABELL COMPANY, Appellant,

v.
John W. CHELL et al., and Robert F. Neugebauer, Intervenor,
Appellees.
No. 12941.

United States Court of Appeals Fourth Circuit.

Argued February 20, 1969.
Decided June 10, 1969.

John H. Lewin and Edmund P. Dandridge, Jr., Baltimore, Md., for

appellants.
Melvin J. Sykes and Eli J. Golden, Baltimore, Md., for appellees.
Before HAYNSWORTH, Chief Judge, and WINTER and BUTZNER,
District Judges.
WINTER, Circuit Judge:

The A. S. Abell Company ("Abell"), a publisher of daily morning and evening

newspapers and a Sunday newspaper in Baltimore, sued 33 of its approximately
121 route owners, who buy newspapers at wholesale and sell them at retail and
home delivery to subscribers. The suit was based upon the federal antitrust
laws, and the complaint recited as its purpose a declaration: (a) that the
contractual arrangements between the parties existing prior to March 29, 1968,
were totally illegal and unenforceable, (b) that Abell's repudiation and
rescission of the contracts as illegal was valid and effective, and (c) of Abell's
legal rights in view of the action which it had theretofore taken and that which
was contemplated in the future course of relations with route owners with
respect to price maintenance. The complaint also sought an injunction against
the charging of resale prices by defendants, alleged to have resulted from their
illegal concerted price-fixing activities, in excess of Abell's suggested resale
prices.1 Defendants answered the complaint, concurring in the prayer for a
declaration of the illegality and invalidity of the contractual arrangement in
existence between the parties prior to March 29, 1968, and further prayed, inter

alia, that the court declare and enforce defendants' property rights in their
routes apart from any specific provisions in any particular contract.
2

After the answer was filed, some discovery had ensued, when the court set for
hearing defendants' motion for a continuance of the trial. At that hearing the
district judge, on his own motion, inquired into whether he had the jurisdiction
to grant the declaratory relief which the complaint prayed. 2 The district judge
entered an order denying the specific relief prayed "without prejudice to a trial
of the remaining issues of the case of whether the alleged actions of the
defendants taken after May 6, 1968 were unlawful and, if so, warrant the
issuance of injunctive relief * * *." The ruling was certified as one within 28
U.S.C.A. 1292(b), and we allowed an interlocutory appeal. We reverse and
remand the case for further proceedings.

The allegations and the nature of the relief sought are broad in scope and
extend in time from approximately 1922 until the date suit was filed. They
conveniently divide themselves by March 29, 1968, and hence our discussion
should begin with the significance of that date.

Twenty-five days earlier March 4, 1968 the Supreme Court of the United
States decided Albrecht v. Herald Company, 390 U.S. 145, 88 S.Ct. 869, 19 L.
Ed.2d 998 (1968). This was a suit by a route owner against the publisher of a
morning newspaper distributed in the St. Louis metropolitan area. Route owners
had exclusive territories which were subject to termination if they charged more
than the publisher's suggested retail price. Albrecht, one of the route owners,
adhered to the publisher's price for a considerable time, but then began to
exceed it. In order to require Albrecht to lower his prices, the publisher
informed his customers that it, itself, would deliver the paper to those who
wanted it at the lower price, and it hired another party to solicit Albrecht's
customers. As a result, about 300 of Albrecht's 1,200 customers switched to
direct delivery by the publisher. During these events, the publisher continued to
sell papers to Albrecht but threatened to discontinue doing business with him if
he continued to overcharge. Still later, the publisher persuaded another route
owner to take over the route, at least until such time as Albrecht would hew to
the price line.

Albrecht sued, charging a combination of conspiracy in restraint of trade, under

1 of the Sherman Act. The Court held that Albrecht had a cause of action
under the Act. It stated that, in United States v. Parke, Davis & Co., 362 U.S.
29, 80 S.Ct. 503, 4 L.Ed.2d 505 (1960), it had been held that an illegal
combination to fix prices resulted if a seller suggested retail prices and secured
compliance by means in addition to the mere announcement of policy and the

simple refusal to deal. In Albrecht the doctrine was held applicable to the fixing
of maximum prices, as well as minimum prices; and since, in the Albrecht case,
the publisher did more than merely announce its policy and refusal to deal, an
illegal combination was considered to have developed.
6

Acting upon its interpretation of Albrecht, Abell unilaterally cancelled its

contracts with route owners on March 29, 1968, and purportedly started upon a
new course of conduct. Thus, we consider separately the pre-March 29, 1968,
and post-March 29, 1968, aspects of the total case.

Because the district judge decided the matter summarily as if he were ruling on
a motion to dismiss under Rule 12(b), or a motion for judgment on the
pleadings under Rule 12(c), we accept for the purposes of the appeal the
allegations of the complaint well-pleaded. We do not refer to the allegations of
the answer except where they admit allegations of the complaint or assert a
foundation for cross-relief. At the time that the district judge ruled, some
discovery had been completed, but the extent to which the district judge may
have relied upon the answers to interrogatories and depositions is unclear, so
that we cannot treat the district judge's disposition as one of summary judgment
either under Rule 56, or the exceptions contained in Rules 12(b) and (c).

PRE-MARCH 29, 1968, ASPECT OF THE CASE

8

After alleging its evident economic interest in the retail prices charged its
ultimate subscribers,3 Abell alleged that the contractual arrangement existing
between it and each defendant until March 29, 1968, was substantially
identical, and that the terms and conditions were a combination of rules and
regulations adopted March 31, 1922, as a result of negotiations between it and a
route owners' trade association, known as The Sun Route Owners' Association,
which had as a committee the "Carriers' Council," a memorandum agreement
between Abell and the Carriers' Council similarly negotiated in 1945, various
memoranda changing minor provisions of the contractual arrangement with
regard to rates from time to time thereafter, and certain oral agreements made
between Abell and the route owners, or Abell and the Carriers' Council.

Abell alleged that these contractual arrangements permitted the route owners to
take concerted action through the Carriers' Council in dealing with Abell in
fixing wholesale prices and the performance of each route owner's individual
contract, permitted the concerted participation of all route owners and Abell in
the determination and fixing of resale retail prices from time to time, and
granted each route owner a monopoly of selling Abell's newspapers at retail to
householders within a designated geographical area. Abell further alleged that

the route owners, through the Carriers' Council, exercised the price-fixing
powers vested in them and also exerted economic pressure and coercion on it in
regard to the fixing of wholesale and retail prices, discounts, terms and
conditions of sale. As before stated, Abell, on March 29, 1968, unilaterally
abrogated all previously existing contractual arrangements, purportedly
because of their illegality under Albrecht.4 On April 19, 1968, Abell submitted
to each route owner a new form of contract, the details of which will be set
forth later.
10

Because the basis of the district judge's rulings is set forth only in his tentative
views expressed orally at the hearing and subsequent colloquy with counsel
when they tried to persuade him otherwise, we have difficulty in determining
with complete accuracy exactly what the basis was. In regard to the pre-March
29, 1968, aspect of the case, the district judge was apparently of the view that
since defendants joined in the prayer for declaratory relief, there was "no case
of actual controversy" between the parties within the meaning of 28 U.S.C.A.
2201, with the result that the district court lacked jurisdictional power to grant a
declaratory judgment. We disagree.

11

On its face, the complaint raises issues under the federal anti-trust laws
indeed, at least one issue which, if the allegations can be sustained, indicates a
course of dealing in violation of the teachings of Albrecht and in the
ordinary case, jurisdiction would clearly exist under 28 U.S.C.A. 1337
irrespective of citizenship or amount in controversy and thus the jurisdictional
requirement of 28 U.S.C.A. 2201 would be satisfied. While jurisdiction
cannot be conferred by consent if it does not otherwise exist, it is not
insignificant that defendants, represented by competent counsel, conceded
jurisdiction in their answer to the complaint.

12

We need not consider whether there would have been a "case of actual
controversy" between the parties if Abell sought solely a declaration that its
previous contractual relations with route owners fell within the ambit
condemned in Albrecht and if defendants conceded the illegality of the previous
arrangements, because Abell prayed more, as have the route owners in their
cross-prayer for relief. Abell alleged that it sought a declaration that the
previous contractual arrangements were "totally illegal and unenforceable by
any party thereto" and that its March 29, 1968, repudiation was "valid and
legally effective * * * repudiating as illegal and rescinding said contractual
arrangements and each of them." We, therefore, read Abell's requested relief as
a declaration not only that Albrecht renders illegal that which was done, but that
Abell is insulated from liability for any of the sequelae of that illegality.

13

Defendants' concession as to illegality under Albrecht does not extend to the

latter. In their answer defendants prayed that the court declare and enforce their
property rights in their routes apart from any specific provisions in any
particular contract, notwithstanding that they concurred in the prayer for a
declaration of the illegality and invalidity of the pre-March 29, 1968,
contractual arrangements. In essence, defendants contend that the pre-March 29
contractual relationship, although illegal, established or manifested a
relationship between the parties which continues to exist. Clearly, therefore,
there is considerable controversy concerning the residual effects of the
admittedly illegal contracts and their purported termination by Abell.
Furthermore, although it is not before us, we are advised that over 100 route
owners have jointly filed a treble damage suit against Abell, in which jury trials
are prayed, alleging that Abell, in part before the decision in Albrecht violated
the federal antitrust laws, on the theory that by means of the contracts Abell,
inter alia, coerced defendants into illegal price maintenance. Thus, from a close
reading of the pleadings, corroborated by subsequent events, it appears that
there is a substantial dispute between the parties as to the effect of Albrecht
upon the rights and liabilities of the parties for their dealings during the preMarch 29, 1968, era.

14

In concluding that there was a case of actual controversy and that the district
court did possess jurisdiction to grant declaratory relief as to the pre-March 29,
1968, aspect of the case, we decide no more. The defendants have argued
before us that the granting of declaratory relief is discretionary, citing, inter
alia, Public Affairs Associates, Inc. v. Rickover, 369 U.S. 111, 82 S.Ct. 580, 7
L.Ed.2d 604 (1962); A. L. Mechling Barge Lines, Inc. v. United States, 368
U.S. 324, 82 S.Ct. 337, 7 L.Ed.2d 317 (1961); Public Service Comm. of Utah v.
Wycoff Co., 344 U.S. 237, 73 S.Ct. 236, 97 L.Ed. 291 (1952); Doby v. Brown,
232 F.2d 504 (4 Cir.), cert. den., 352 U.S. 837, 77 S.Ct. 57, 1 L.Ed.2d 55
(1956); Carbide & Carbon Chemicals Corp v. United States Industrial
Chemicals, 140 F.2d 47 (4 Cir. 1944); Aetna Casualty & Surety Co. v. Quarles,
92 F.2d 321 (4 Cir. 1937). We think that the doctrine of these cases is
inapposite at the present stage of the proceedings for the reason that we do not
understand that the district judge exercised any discretion that he may have
possessed, and this failure precludes us from considering the correctness of his
order on that basis. Sprague v. Ticonic Nat. Bank, 307 U.S. 161, 59 S.Ct. 777,
83 L.Ed. 1184 (1939); Maryland Casualty Co. v. United Corp., 111 F.2d 443,
446 (1 Cir. 1940); Columbian Nat. Life Ins. Co. v. Foulke, 89 F.2d 261, 263 (8
Cir. 1937). There will be ample time for the district judge to consider this
contention, as well as others we shall mention, when a sufficient record has
been developed before him to provide him with a satisfactory basis on which to
act.

15

Because the route owners' treble damage suit was filed after the district judge
decided the instant litigation, on remand the district judge should consider also
the effect of the pendency of other litigation on Abell's prayers for declaratory
relief in the light of such authorities as Altvater v. Freeman, 319 U.S. 359, 366367, 63 S.Ct. 1115, 87 L.Ed. 1450 (1943) (opinion of Frankfurter, J.); Carbide
& Carbon Chemicals Corp. v. United States Industrial Chemicals, supra;
Chicago Furniture Forwarding Co. v. Bowles, 161 F.2d 411 (7 Cir. 1947);
McGraw-Edison Co. v. Preformed Line Products Co., 362 F.2d 339 (9 Cir.),
cert. den., 385 U.S. 919, 87 S.Ct. 229, 17 L.Ed. 2d 143 (1966). Possibly the
district judge may conclude to consolidate the cases and sever and try
separately common basic questions. Precisely what should be done we do not
say, because there is before us only the bare pleadings in the instant case and
none of the significant data which might be developed from counsel in
argument on the point or at pretrial conference or from an examination of the
pleadings in the treble damage suit; but we do not foreclose any of the myriad
of possibilities which may be suggested by the parties as the case proceeds, or
which may be indicated at a pretrial conference, to bring about the prompt and
efficient administration of justice. In this regard we note that Abell has
approximately 121 route owners, Abell has sued 33 of them, and over 100 have
sued Abell. Declaratory relief may properly be withheld for nonjoinder of
interested parties, Abbott Laboratories v. Gardner, 387 U.S. 136, 155, 87 S.Ct.
1507, 18 L.Ed.2d 681 (1967) (dictum); Franklin Life Ins. Co. v. Johnson, 157
F.2d 653, 658 (10 Cir. 1946) (dictum); but, if it otherwise appears that
declaratory relief would serve a useful purpose, this rule should not be
stringently applied when the court may order the joinder of additional parties,
even on its own initiative, so as to be able to give complete relief. Rule 21,
Fed.R. Civ.Pro.

POST-MARCH 29, 1968, ASPECTS OF THE CASE

16

To the extent that the district judge retained jurisdiction of the aspects of the
case occurring post-Albrecht, i. e., whether defendants' actions taken after May
6, 1968, were unlawful and, if so, warrant the issuance of injunctive relief, no
appeal has been sought and the correctness of this portion of the ruling is not
before us. We confine ourselves to the post-March 29, 1968, portion of the case
which the district judge dismissed.

17

After its March 29, 1968, unilateral termination of previously existing

contractual arrangements, Abell alleged that it advised its route owners of
suggested weekly home delivery prices and wholesale prices which Abell had
concluded to charge and, further, how Abell intended to handle the matter of
discounts and payments into a pension plan, and tendered a new form of

proposed agreement to be entered into between Abell and each route owner.5
Abell alleged that only one defendant responded to this communication, and
that only three route owners, none of them defendants, undertook negotiations
concerning the proposed new contract.
18

Abell alleged that on May 5, 1968, it put into effect new wholesale prices to
each route owner for its newspapers to be sold thereafter. There follow a
number of allegations with which we are not presently concerned, to the effect
that the route owners concertedly took action to raise resale prices to their
customers above Abell's suggested resale prices, and that such action was
intended to cause, and did cause, substantial decreases in the circulation of
Abell's newspapers. Lastly, Abell alleged that it might be necessary for it to
exercise its rights to refuse independently to deal further with the defendants,
and if it were required to take such action it might be subject to civil suits
brought by defendants claiming that its refusal to deal constituted a violation of
the antitrust laws. Collectively, on these allegations, Abell prayed a declaration
that so long as it continues to act independently and unilaterally with regard to
each defendant it is legally free to choose its own customers and to terminate its
relationship separately with each defendant and refuse to sell its newspapers to
each defendant.

19

As we read the opinion of the district judge and the colloquy in which he
engaged, the complaint was dismissed as to this aspect of the case, essentially
because Abell alleged a "purely hypothetical case." The district judge remarked
that Abell was "asking the Court to be a party to the fixing of prices, and
thereby to give the plaintiff immunity * * *" and, elsewhere, that "plaintiff
wants an advisory opinion as to what it may do in the future in order to
determine how much pressure it can put on the would be, or it hopes would be,
contracting parties. It talks about being a disinterested party for further
negotiations, but it wants this Court as its partner in its negotiations."

20

We do not question the existence or desirability of the rule that a declaratory

judgment may not be given for a purely hypothetical situation or that the proper
function of a declaratory judgment is not that of an advisory opinion. See, e. g.,
Public Service Comm. of Utah v. Wycoff Co., supra; St. Louis, Missouri, Paper
Carriers Union No. 450 v. Pulitzer Publishing Co., 309 F.2d 716 (8 Cir. 1962).
By the same token, a party is not required in all instances to take irretrievable
steps and accrue peril before he may obtain a declaration of his rights. See, e.
g., Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 61 S. Ct.
510, 85 L.Ed. 826 (1941); Altvater v. Freeman, 319 U.S. 359, 63 S.Ct. 1115, 87
L.Ed. 1450 (1943); Keener Oil & Gas Co. v. Consolidated Gas Utilities Corp.,
190 F.2d 985, 989 (10 Cir. 1951). In considering the correctness of the district

judge's views, we must take into consideration that current federal pleading is
essentially notice pleading and not evidentiary pleading. It is true that the
complaint is vague and general as to what future course of conduct Abell
intends to take with respect to route owners, beyond that which it took
immediately after termination up to filing suit, for which it prays a declaration
of legality; but this is not to say that, on the basis of the mere complaint alone,
Abell's request for relief should be conclusively presumed to be hypothetical, or
that Abell should be charged with seeking to entice the district court into being
its bargaining ally. Before Abell would be entitled to declaratory relief as to its
future course of action it must prove with some degree of specificity what that
action will be and the circumstances under which it will be taken, but Abell
should not be denied the opportunity to advance such proof in support of the
allegations it has made.
21

In short, we hold that the district judge was in error in his summary rejection of
Abell's claim to declaratory relief concerning future conduct on the basis of
what was before him. The district judge may well conclude, on proper gounds,
that Abell is not entitled to such relief after further discovery, on motion for
summary judgment, at a pretrial conference, or, on a required tender of
proposed proof, such as was employed in Amplex of Maryland, Inc. v.
Outboard Marine Corp., 380 F.2d 112 (4 Cir. 1967), cert. den., 389 U.S. 1036,
88 S.Ct. 768, 19 L.Ed.2d 823 (1968), to name some of the ways in which a
proper record on which to apply the prohibition against declaratory judgments
in hypothetical situations may be developed. The point is that more of a record
must be developed before the conclusions which the district judge reached are
sustainable.

22

In considering the post-March 29, 1968, aspects of the case which we now
review, the district judge will have the same flexibility which we have earlier
discussed. He may consider and conclude to consolidate or not to consolidate
this aspect of the case with the other litigation which was subsequently filed,
and he may conclude to require or not to require the joinder of additional
parties. He will be free, after a record has been developed to show Abell's
intended future course of dealings, to exercise fully the discretionary power to
grant or withhold declaratory relief on any proper basis. Because we, too, have
before us an inadequate record to decide these various possible questions, we
intend no intimation of how they should be resolved.

23

Since the necessity for this appeal arose not at the instance of defendants, we
shall require the parties each to bear their own costs.

24

Reversed and remanded.

Notes:
1

The specific prayers of the complaint, in addition to a prayer for general relief,
were:
"1. That defendants, and each of them, be enjoined during the pendency of this
action from charging the prices concertedly fixed by them as alleged for
newspapers purchased from plaintiff for resale in excess of forty cents per week
for each of The Sun and The Evening Sun, and twenty-five cents per week for
The Sunday Sun.
"2. That the contractual arrangement, as it was construed and applied, which
subsisted between plaintiff and each defendant prior to March 29, 1968, was
and is invalid in its entirety and unenforceable by either party thereto.
"3. That the action of plaintiff taken March 29, 1968, in repudiating as illegal
and terminating each said contractual arrangement with each defendant was and
is valid and legally effective.
"4. That plaintiff, so long as it continues to act independently and unilaterally
with regard to each defendant, is legally free to choose its own customers and to
terminate its relationship completely with each defendant, and refuse to sell its
newspapers to such defendant.
"5. That plaintiff recover its costs".

The answer alleged as a first defense that the complaint failed to state a claim
upon which relief might be granted. The record indicates, however, that the
question of whether the court had jurisdiction to grant declaratory and
injunctive relief was raised by the courtsua sponte at a hearing on defendants'
motion for a continuance. The format of the procedure was that the court
announced its tentative conclusion and then afforded counsel an opportunity to
persuade it otherwise. Counsel were unsuccessful.

Succinctly stated, the interest is two-fold. Abell derives revenues from the sale
of newspapers and the sale of advertising space. Rates for the latter are directly
affected by the number of subscribers, i. e., circulation and the number of
subscribers is affected,inter alia, by the price of newspapers.

The specific reasons advanced in the notice of termination were as follows:

"This review [of the decision inAlbrecht] has led us to the conclusion that a
number of provisions of the arrangement, one for the benefit of this Company
and at least two others for the benefit of the Route Owners, are invalid under
the Federal anti-trust laws and these provisions, which permeate the entire
contract, are of such a nature and so interdependent that each of these
arrangements is completely invalid and unenforceable by either party. We refer
specifically not only to the Route Owner's obligation relating to resale prices
but also to the restrictions upon us to permit an exclusive home delivery
territory for each Route Owner and to engage in concerted action with the
Route Owners as a group through their Carriers' Council in determining the
original wholesale prices and terms, including the provision for arbitration."
5

Briefly stated, the contract would fix on an individual basis the number of
copies of each newspaper to be purchased by the route owner, the price
therefor, and the discounts and allowances applicable thereto. Abell would
retain the right to change wholesale prices upon ten days' written notice. The
proposed contract would also cover billing by Abell to the route owner,
delivery of papers to the route owner, and the obligations of the route owner to
his customers. Abell would agree to furnish the route owner from time to time
with a schedule of suggested retail prices, although there was recognition that
the route owner was not required contractually to adhere to the schedule. In this
connection, there was a full reservation of Abell's rights to refuse to deal with a
route owner if he did not abide by the suggested schedule of retail prices. The
contract could be terminated for cause or without cause and, in the event of
termination, except by abandonment by a route owner, Abell agreed to
purchase the route at the "fair market value" computed in accordance with a
formula spelled out in the contract with a right to arbitration if the parties could
not agree. With the approval of Abell, a route owner could assign his route. He
was also required to carry certain minimum insurance policies and to deposit
security for payment of the amounts he might thereafter owe Abell